CEMEX, S.A.B. de C.V. — 2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a quarterly filing; the provided text does not give standalone fourth-quarter results. Financial statements are prepared under IFRS as issued by the IASB. Amounts below are in U.S. dollars unless indicated otherwise.
Business context
Cemex is a global producer and distributor of cement, ready-mix concrete, aggregates and Urbanization Solutions, operating in more than 50 countries. In 2023, it reported cement sales of 59.6 million tons, ready-mix concrete sales of 47.1 million cubic meters and aggregates sales of 138.8 million tons. The United States and Mexico contributed 31% and 28% of consolidated external revenue, respectively.
Key financial metrics
| Metric | 2023 | 2022 | Change / context |
|---|---|---|---|
| Revenue | $17.388bn | $15.577bn | Up 12%; price increases across regions were the main driver. |
| Gross profit / margin | $5.861bn / 33.7% | $4.822bn / 31.0% | Gross profit up 22%; margin improved. |
| Operating earnings before other expenses, net | $2.114bn | $1.561bn | Up 35%; 12.1% of revenue versus 10.0%. |
| Operating EBITDA / margin | $3.347bn / 19.2% | $2.681bn / 17.2% | EBITDA up 25%; non-IFRS measure. |
| Operating earnings | $1.849bn | $1.094bn | Other expenses, net, were $265m versus $467m. |
| Net income attributable to controlling interest | $182m | $858m | Down 79%, primarily reflecting the unusually high tax expense. |
| Cash flows from continuing operating activities | $3.278bn | $2.150bn | After cash interest and income taxes: $2.159bn versus $1.469bn. |
| Capital expenditures | $1.417bn | $1.362bn | 2024 estimate: $1.600bn, including $1.000bn expansion and $600m base capex. |
| Cash and cash equivalents | $624m | $495m | |
| Total debt plus other financial obligations | $8.164bn | $8.825bn | Down $661m; excludes $2.000bn principal amount of subordinated notes classified as equity under IFRS. |
| Credit-agreement leverage ratio | 2.06x | 2.84x | Improved by 0.78x. |
Current liabilities exceeded current assets by $1.781bn. Management describes negative working capital as part of its operating strategy and said working capital was sufficient for current requirements. At year-end, $1.400bn remained available under the committed revolving facility; other uncommitted credit lines were also available, subject to lender availability. Debt maturities disclosed for 2024–2027 were $975m, $956m, $974m and $689m, respectively; $4.570bn was scheduled after 2027.
Material changes versus 2022
- Revenue increased 12%, despite consolidated cement and ready-mix sales volumes each falling 6%. Higher local-currency pricing was the principal revenue driver.
- Cost of sales rose 7% in dollars but fell as a share of revenue, from 69.0% to 66.3%; gross margin and Operating EBITDA margin improved.
- Performance varied by market. Mexico cement and ready-mix volumes rose 3% and 7%; U.S. volumes fell 13% and 10%. Germany and the Philippines also reported notable volume declines.
- Cash flows from continuing operating activities rose to $3.278bn from $2.150bn, supported in part by working-capital movements, including lower inventories and higher collections.
- Debt plus other financial obligations declined by $661m. The Amended 2021 Credit Agreement and Mexican Peso Banorte facility were refinanced with maturities extended to 2028.
- Controlling-interest net income fell sharply, largely because income tax expense increased to $1.250bn from $209m. Other expenses, net, declined partly because 2022 included $365m of goodwill impairment; no goodwill impairment was recognized in 2023.
Outlook, commentary and risks
- Capital allocation: Management said results support bolt-on growth, a progressive shareholder return policy and further strengthening of the capital structure. At the March 2024 shareholder meeting, investors approved a $120m cash dividend, payable in four equal installments from June 2024 through March 2025, and authorized up to $500m for share repurchases through the next annual meeting. These are post-year-end developments, not 2023 payments.
- Credit: Cemex reported obtaining an investment-grade rating in March 2024 and said it intends to maintain or improve ratings. The filing gives no numeric consolidated revenue or EBITDA guidance.
- Tax matters: Cemex recorded a $503m provision related to Spanish tax fines for 2006–2009 and an additional $117m tax expense related to Spanish tax assessments for 2010–2014, contributing to the approximately $620m 2023 tax charge. The company expected to pay the $503m fine in the first half of 2024 and said it had liquidity sources available. A subsequent 2024 development reduced the 2010–2014 assessment; Cemex paid tax and interest of approximately $66m and sought postponement of the remaining penalty.
- Execution and demand: Construction activity, weather, inflation, energy and fuel costs, competitive pricing, foreign exchange movements and elevated interest rates may affect volumes, margins and debt service. Management cited weaker demand in several European markets and lower U.S. volumes.
- Legal and operating exposure: The filing describes ongoing investigations, including SEC and DOJ matters related mainly to Colombia and the Maceo project, as well as antitrust, tax and environmental proceedings. Maceo construction was reported 86% complete and its access road 52% complete at year-end; commissioning was expected in the second half of 2024, but road permits and other processes remained outstanding.
- Climate and energy: Cemex reported a 4% decline in Scope 1 specific net CO2 emissions in 2023, a 36.8% alternative-fuel substitution rate and a 72.3% clinker factor. Its targets depend on technology, investment, fuel availability and evolving emissions rules; sustainability-linked financing may become more costly if specified targets are missed.
- Portfolio change: In April 2024, Cemex signed agreements to divest its Philippine operations, subject to regulatory approvals, a mandatory tender offer and other closing conditions. The company expected completion before year-end 2024; no sale proceeds were included in 2023 results.
Most important facts for investors to verify
- Reconcile the approximately $620m 2023 tax charge to the Spanish tax provisions, subsequent assessments, payments and any remaining liabilities.
- Review the definition and reconciliation of Operating EBITDA and the credit-agreement leverage ratio; both are non-IFRS or contract-defined measures.
- Assess the debt maturity schedule, refinancing assumptions, available committed liquidity and restrictions under credit agreements and note indentures.
- Track the Philippine divestiture’s approvals, tender-offer requirements, final consideration and expected closing date.
- Monitor Maceo road permits, remaining construction, commissioning timing and the status and potential financial consequences of related proceedings.
- Evaluate whether price increases can continue to offset lower volumes and persistent energy, freight and labor costs, especially in the United States and Europe.
- Confirm that the approved dividend and share-repurchase authorization are implemented as described, subject to cash generation, covenants and subsidiary distributions.
Audit and controls: KPMG issued an unqualified opinion on the IFRS consolidated financial statements and an unqualified opinion on internal control over financial reporting as of December 31, 2023. The auditor identified goodwill impairment, the Spanish tax proceeding and certain Colombian legal proceedings as critical audit matters.